SDGP #21 Optimize and scale the sdCRV/CRV liquidity pool on Curve

Summary:

This proposal aims to establish a scalable approach to gradually increase the sdCRVCRV liquidity pool on Curve. It involves optimizing the voting process and fee structure as follows:

Utilize sdCRV tokens within the sdCRVCRV pool on Curve to vote for the sdCRVCRV pool, considering them as non-boosted (voting power = amount of sdCRV in the Curve pool * minimum boost).

Introduce a 10% fee on the Curve native yield (currently 3CRV) that will be used to allocate vote bounties on Votemarket specifically for the sdCRVCRV pool when liquidity is below the targeted amount (target 10/90 : see below).

This approach ensures that the sdCRVCRV liquidity pool grows over time and scales in alignment with the growth of the CRV Liquid Locker.

Background and Motivation:

Over the past months, the CRV Liquid Locker has experienced remarkable growth, with the veCRV locked increasing from 25 million to 50 million. However, the sdCRVCRV liquidity has remained stagnant, with 2,200,000 sdCRV and 1,300,000 CRV inside the Curve pool.

Previously, the ratio between CRV inside the pool and sdCRV inside the sdCRV-gauge was above 10-90. Currently, the ratio has shifted below 5-95. Consequently, this proposal aims to optimize and scale the sdCRVCRV liquidity to address this discrepancy.

To optimize the sdCRVCRV liquidity, we propose utilizing sdCRV tokens within the sdCRVCRV pool on Curve for voting purposes. These tokens will be considered as non-boosted, resulting in the direction of votes towards the sdCRVCRV pool.

With the current amounts of 2,200,000 sdCRV inside the Curve pool and a minimum boost of x0.58, this will effectively increase by 50% the CRV rewards sent to the sdCRVCRV gauge, aiming to restore the desired 90-10 ratio.

This approach establishes a positive flywheel: as the sdCRV inside the sdCRVCRV pool increases, the pool receives more votes, facilitating the scaling of both the CRV liquid locker and the sdCRVCRV liquidity.

It’s important to note that this optimization has a limited impact on the APR of the sdCRV-gauges’ voting power, reducing it by only 1 point.

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Additionally, as the sdCRV inside the Curve pool increases, the Curve native yield (currently 3CRV) for sdCRV-gauge holders will also rise. To support this proposal, a 10% fee on the Curve native yield (currently 3CRV) will be introduced, allocating vote bounties on Votemarket specifically for the sdCRVCRV pool when liquidity is below the targeted amount (target 10/90).

Means:

Human resources: Minimal developer time needed Treasury resources: No treasury resources needed

Voting options:

1. Yes for both options
2. Yes for “sdCRV tokens within the sdCRVCRV pool on Curve for voting purposes” option only
3. Rework the proposal

Proposal specifications:

• Admin(s): veSDT holders
• Community feedback: 2 days min
• Voting duration: 5 days